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After his stunning acquittal on all criminal counts, Richard Scrushy still faces civil charges by the Securities and Exchange Commission which some experts say are more likely to be successful for the government. The SEC’s case was deferred in mid-2003 when it was deemed to be in conflict with the Justice Department’s criminal prosecution of HealthSouth Corp., the medical services company founded and led by Scrushy. A federal judge halted the SEC’s case until Justice completed its criminal investigation of Scrushy, and lifted an SEC-requested freeze on the estimated $150 million in his opulent assets. Scrushy escaped prison with his acquittal Tuesday on criminal charges of orchestrating a $2.7 billion accounting fraud at HealthSouth. While the SEC is seeking an unspecified fine and restitution, civil charges involve less severe penalties and the burden of proof is significantly lower than in criminal cases. “There’s absolutely a better chance” for the SEC in a case against Scrushy, said Donald Langevoort, a former SEC special counsel who teaches securities law at Georgetown University. Chief among the SEC’s allegations is that Scrushy made a false declaration to the agency by signing as CEO the company’s inaccurate financial statements. Kirby Behre, a former federal prosecutor now in private law practice, suggested that his acquittal makes it more likely that Scrushy will agree to a settlement with the SEC “to put all of this behind him.” The verdict by a federal jury in Birmingham, Ala., following 21 days of deliberations, was “a major setback for the Department of Justice,” Behre said. SEC spokesman John Nester declined comment. Scrushy was the first CEO charged under the landmark Sarbanes-Oxley corporate accountability law, enacted during the wave of company scandals in 2002, which stiffened penalties for corporate fraud. The law also required CEOs and finance chiefs to personally certify in writing the accuracy of company financial statements. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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